SoftBank’s Yahoo! Japan is merging with Naver Corp’s Japanese messaging app LINE in a deal that will give each company a 50 percent stake, The Wall Street Journal reported on Monday (Nov. 18).
The deal creates a mega-platform with more than 100 million users across financial services, eCommerce and more. LINE is Japan's most popular chat app with 82 million monthly users, putting it far ahead of both Instagram and Facebook in the country.
The tender offer for LINE’s remaining shares will be ¥5,200, a 13.41 percent premium over the Nov. 13 closing price of LINE’s common shares, according to a SoftBank memorandum.
The merger is expected to be completed in October 2020 and values LINE at ¥1.3 trillion. The combined group has a market value of ¥3.3 trillion with $11 billion in combined revenue.
Kentaro Kawabe, CEO of Yahoo! Japan’s parent, told WSJ that “the SoftBank-Naver joint venture would hold 65 percent of that company and the rest would be owned by minority shareholders.”
According to analysts, the combined company could end up as a formidable competitor in Japan to Google and Amazon.
“We were driven by a sense of crisis about global competition and the pace of change in AI,” Takeshi Idezawa, co-chief executive at LINE, said at a joint press conference in Tokyo, as the Financial Times reported. “The timing arrived for us to move on to the next phase [with this merger].”
In February, LINE was planning to invest ¥20 billion ($182 million) into its payments business in an effort to grow that area of its operations. The company said it sees a big in Japan as the government aims to get people used to digital payments at the 2020 Olympic Games.
LINE Pay is also available in Thailand, Taiwan and Indonesia. It used to be available in Singapore until it was forced to shut down operations in February.